Buy Suzlon Energy; target of Rs 55: ICICI Securities

Moneycontrol • 2 days ago

Original source

Key Investment Pillars

  • Suzlon Energy's order book stands at 6GW, with 1.5GW of H1FY27 orders, driven by its new DevCo model, indicating a strong demand and growth visibility.
  • The company is shifting towards a full-stack RE solutions platform, enhancing its EPC share to 50% by FY28, which could lead to higher margins and profitability.
  • Execution is gathering pace, with Q2FY27 deliveries up 26% YoY and commissioning rising 69% QoQ, although profitability is yet to catch up due to commodity and forex inflation, and Suzlon 2.0 setup costs.
  • Management guides for a 15-16% FY27 margin, with H2 operating leverage expected to aid margins.

Thesis Validation Checklist

To validate the investment thesis, investors should watch for:

  • Order book growth and execution pace, particularly in the DevCo model,
  • Margin expansion driven by operating leverage and EPC share growth,
  • Successful implementation of the Suzlon 2.0 strategy, and
  • Industry trends, including renewable energy capacity additions and policy support.